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[2019] ZAWCHC 175
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Moodliar NO and Another v Occupiers of Zonnekus Mansion, Chandpos Close, Woodbridge Island, Milnerton (5150/2018) [2019] ZAWCHC 175 (28 March 2019)
THE
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH
AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 5150/2018
Before
the Hon. Mr Justice Bozalek
Hearing: 27
November, 6 December 2018, 13 and 14 February 2019
Delivered:
28 March 2019
In
the matter between:
SIVALUTCHMEE
MOODLIAR
N.O. 1st
Applicant
GORDON
NOKHANDA
N.O. 2nd
Applicant
and
THE
OCCUPIERS OF ZONNEKUS MANSION,
CHANDOS
CLOSE, WOODBRIDGE ISLAND, MILNERTON Respondents
JUDGMENT
BOZALEK J
[1]
This
is an application in terms of section 4 of the Prevention of Illegal
Eviction from and Unlawful Occupation of Land Act, 19
of 1998 (‘PIE
’
)
in
which the applicants, the joint liquidators of a property owning
company, Zonnekus Mansion (Pty) Ltd (in liquidation) (‘Zonnekus’),
seek the eviction from a property of all the present occupiers.
[2]
The
property is a large and historic homestead on Woodbridge Island,
Milnerton. It was formerly the holiday home of Sir De Villiers
Graaf,
MP and was acquired by Zonnekus some 20 years ago. The respondents
are all the occupiers of Zonnekus Mansion and were originally
listed
as: Mr Gary van der Merwe; his wife and son; Mr DT Nkhoma, the
property manager; Mr A Fanaroff, his wife and two children;
Mrs Fern
Cameron, Mr van der Merwe’s mother and her partner; Mr T Dunn,
an attorney practising under the name and style of
TJC Dunn Attorneys
and Wild Olive Enterprises (Pty) Ltd (‘Wild Olive’)
(formerly Bank On Assets Global (Pty) Ltd (‘BOAG’),
a
company having its registered address at the premises.
[3]
Only
Mr van der Merwe actively opposes the eviction order for reasons
which will become apparent later. The application was launched
on 23
March 2018 and was followed, on 10 April 2018, by the applicants’
application in terms of section 4(2) of PIE to authorise
service of
the notice.
[4]
On
13 April 2018, JMB Gillan Attorneys filed a notice stating that they
would forthwith act as attorneys of record for ‘
the
respondents’
i.e. by implication all of them. On the same day, those attorneys
filed a notice of intention to oppose the application in terms
of
section 4(2) on behalf of Mr van der Merwe alone.
[5]
On
16 April 2018, by agreement between the parties it was ordered that
both the main application and the section 4(2) application
would be
postponed for hearing to 7 August 2018. On the latter date, the
matter was postponed to 12 November 2018 pending the outcome
of an
application for leave to appeal against the dismissal of a business
rescue application in respect of Zonnekus and was again
postponed for
this reason. That application was dismissed, however, as was a
subsequent application for leave to appeal to the
Constitutional
Court.
[6]
Argument
was heard on 27 November 2018 and on the resumed dated of 6 December
2018. The applications were then postponed to 13 February
2019 when
argument was concluded.
Brief
History
[7]
Zonnekus
was placed into liquidation at the behest of a creditor, Standard
Bank, on 11 September 2014 which order was made final
on 28 October
of the same year. Zonnekus had, however, became embroiled in
litigation as early as August 2013 when a provisional
preservation
order in terms of
section 163
of the
Tax Administration Act, 28 of
2011
, was granted against it and others in favour of SARS. The
preservation order was obtained pending the outcome of an action by
SARS
against Mr van der Merwe and related parties, presumably in
relation to alleged tax debts. That litigation has yet to come to
court.
That order was made final, by agreement, on 19 March 2014.
[8]
Since
Zonnekus was placed into final liquidation in October 2014, four
different business rescue applications were launched by various
parties associated with Mr van der Merwe. None of these business
rescue applications succeeded but leave to appeal were sought
in all
of them and, in several cases, were followed by petitions for leave
to appeal to the Supreme Court of Appeal and applications
for leave
to appeal to the Constitutional Court. What must be borne in mind is
that whilst any business rescue application was
outstanding, or an
appeal against the dismissal of any such order was pending, the
applicants as joint liquidators of Zonnekus
were precluded in law
from taking any further steps to wind up the company.
[9]
The
last such application for leave to appeal to the Constitutional Court
against the dismissal of one of the four business rescue
applications
was dismissed on 12 November 2018, thereby clearing away for the
hearing of this application.
[10]
In
the same period, Zonnekus has been involved in further litigation,
notably a contempt application by Mr van der Merwe and two
others in
their capacity as trustees of Zonnekus’ sole shareholder
against a range of parties including the present applicants
and the
Commissioner for SARS. It is not necessary to describe that
litigation in any further detail.
The
applicants’ case
[11]
The
applicants’ case is that as joint liquidators they are under a
statutory obligation to realise the assets of Zonnekus
for the
benefit of creditors and that the occupiers are in unlawful
occupation of the property, its primary asset, inasmuch as
none of
them occupy pursuant to a lawful lease agreement or have any title to
the property. Their case is further that the property
will not be an
attractive buy for potential purchasers should Mr van der Merwe and
other occupiers not vacate the property. Without
an eviction order,
the liquidators cannot guarantee vacant occupation to any potential
purchaser. Their case is further that the
property will fetch a
higher price should it be sold with vacant occupation and in turn
this would be to the advantage of the creditors
of Zonnekus.
Mr
van der Merwe’s case
[12]
Mr
van der Merwe, who argued his case in person, raises four defences.
Firstly, he contends that the peremptory requirements of
section 4(2)
of PIE, which requires service of a notice upon all the occupiers,
have not been met. On this ground alone he seeks a dismissal
of the
application and an order that the applicants pay costs
de
bonis propriis
.
The second point which he raises is the argument that the
preservation order in terms of
section 163
of the
Tax Administration
Act precludes
the applicants from ‘
dealing
in the property’
,
which would encompass an application such as the present for the
eviction of the occupiers. Mr van der Merwe’s third procedural
defence is that the present application is incompetent in that it was
brought at a time when an appeal was pending against a business
rescue application with the result that the applicants were precluded
from launching any such proceedings. He also contends that
the
applicants were never properly authorized to bring these proceedings,
inter alia for want of a creditor’s resolution
to that effect.
Finally, at a substantive level, Mr van der Merwe contends that he
occupies the property pursuant to a valid lease
agreement and that on
an application of the
Plascon
Evans
principle, the applicants are not entitled to the final relief they
seek in the face of his averments in this regard.
[13]
I
shall deal with these defences in the sequence set out.
Compliance
with
section 4(2)
of PIE
[14]
In
terms of
section 4(2)
of PIE, the Court must serve written and
effective notice of the proceedings on any alleged unlawful occupiers
as well as the Municipality
having jurisdiction at least 14 days
before the hearing of proceedings for an eviction order.
[15]
Unusually,
in the present instance the notice required by
section 4(2)
and which
the applicants sought in the interlocutory application launched in
April 2018, has not been authorised by Court. This
is so because the
section 4(2)
application was opposed by Mr van der Merwe and, for
reasons best known to him and the applicants, was postponed in tandem
with
the main application and never separately determined. In one of
Mr van der Merwe’s affidavits, he challenges the applicants
to
effect service in terms of
section 4(2)
of PIE on other occupiers and
warns them that they must not look to him to give notice of the
application to other occupiers.
[16]
As
I have stated, Mr van der Merwe argues that the requirements of
section 4(2)
are peremptory and that the application must be
dismissed for non-compliance with this requirement. However, even
accepting that
these statutory formalities are peremptory, it is not
every deviation that is fatal and the question is whether, in spite
of any
defects, the object of the statutory provision has been
achieved. See in this regard
Unlawful
Occupiers School Site v City of Johannesburg
.
[1]
Before considering this question closer regard must be had to
the position of each of the occupiers, bearing in mind that
the
purpose of
section 4(2)
is to afford the occupiers of properties
subject to an application for eviction under PIE an additional
opportunity, apart from
the opportunity they have already had under
the Rules of Court, to put all relevant circumstances before the
Court.
[17]
As
has been indicated the main application was served on 26 March 2018,
although not by the Sheriff. Receipt of the papers was vouched
for
under the stamp of TJC Dunn Attorneys. That firm of attorneys
practises from the property and more often than not represents
Mr van
der Merwe and his associated companies and entities in litigation.
Nonetheless, no response was forthcoming to the notice
of motion.
[18]
On
10 April 2018, the
section 4(2)
application was served but again not
through the office of the Sheriff and it is unclear upon whom at the
property those papers
were served. Nonetheless, three days later JMB
Gillan Attorneys filed a ‘
notice
of appointment of attorney of record’
on
behalf of ‘
respondents’
who had been cited as ‘
the
occupiers of Zonnekus Mansion’
.
On the same day those attorneys filed a notice of intention to defend
the
section 4(2)
application on behalf of Mr van der Merwe alone. On
6 June 2018, the JMB Gillan Attorneys withdrew and since then the
proceedings
have been opposed by Mr van der Merwe alone and legally
unrepresented. However, after the matter, part-heard, was postponed
on
6 December 2018 for hearing to 13 February 2019, a notice of set
down to which was attached a notice of motion was served on the
respondents through the Deputy Sheriff. That service is described in
detail in an affidavit by the applicants’ attorney,
Ms A Spies.
The notice of set down states that on the postponed date the Court
would be asked to grant an eviction order against
all the occupiers
of the property on the grounds set out in the annexed original notice
of motion. In her affidavit, Ms Spies describes
how, on 7 December
2018, she instructed the Sheriff to serve the notice of set down and
annexure on all the parties listed as occupiers
in the annexure to
the original notice of motion, plus a number of others. The attorney
explains that at the hearing on 27 November
2018 the Court had
expressed concern that, although the eviction application was opposed
by Mr van der Merwe, the other respondents
might not be aware of the
eviction application. She added that the purpose of the affidavit was
to address the Court’s concerns
in that regard. The attorney
specifically requested the Sheriff to read out the contents of the
notice of set down over a loudspeaker
if personal service could not
be effected on all the parties mentioned above. Mr van der Merwe was
present and requested the attorney
to leave the property immediately.
[19]
After
half an hour, the Sheriff reported to Ms Spies that he had served the
notice personally on Mr van der Merwe and that the latter
had advised
that: his wife no longer resided there, that certain other members of
his family were not present but that he would
accept service of the
notice on their behalf; that he served the notice on Mr Nkhoma who
advised that another party with the same
surname was no longer
residing there; Mr van der Merwe further advised that Mr Fanaroff and
his family were no longer resident
on the property; that Mr van der
Merwe’s mother was not currently present but that he would
accept service on her behalf;
that the notice was served on Mr Dunn
personally and on Mr van der Merwe as representative of Wild Olive.
Finally, the Sheriff
reported that he was told by Mr van der Merwe
that no other persons occupied the property and in view of the above
he was advised
by Mr van der Merwe that it was not necessary to read
the contents of the notice out over the loudspeaker. Returns of
service by
the Sheriff vouching for all this information were
furnished.
[20]
On
the basis of these allegations and the returns of services, the
applicants’ attorney alleged that all occupiers are aware
of
their eviction application and the fact that the hearing would resume
on 13 February 2019. None of this material was disputed
by Mr van der
Merwe.
[21]
The
position regarding service on the individual occupiers is therefore
as follows:
1.
Mr
van der Merwe has had effective notice since he instructed attorneys
to represent him at an early stage and he has argued the
matter in
court throughout;
2.
Mr
Dunn has had effective notice because a receipt stamp shows that his
firm received the original papers on 26 March 2018; he has
been
present in court virtually throughout the proceedings and he was
personally served with the notice of motion and notice of
set down on
10 December 2018;
3.
Mr
David Nkhoma was on the list of occupiers on whose behalf the initial
attorneys once acted and he received personal service on
10 December
2018;
4.
Mr
Allan Fanaroff, his wife and two children had left the property by 10
December 2018;
5.
Mrs
Fern Cameron (Mr van der Merwe’s mother) was one of the
occupiers on whose behalf the initial attorneys acted and service
on
her behalf was accepted by Mr van der Merwe on 10 December 2018;
6.
Wild
Olive – was one of the occupiers on whose behalf the initial
attorneys acted and service on its behalf was accepted by
Mr van der
Merwe on 10 December 2018;
7.
Any
and all other persons occupying the premises – to the extent
that they occupied the premises in April 2018 the initial
attorneys
acted on their behalf. In addition, Mr van der Merwe accepted service
on behalf of his children Richard and Candice van
der Merwe whilst
the Sheriff was advised by him that his wife/ex-wife no longer
occupied the property;
8.
The
Sheriff was further advised that a certain Mr Wizard Nkhoma no longer
occupied the property and service was accepted by Mr van
der Merwe on
behalf of Mr John Cameron, apparently his father in law, and Ms
Angelique Aspeling, apparently Mr van der Merwe’s
partner, also
on 10 December 2018.
[22]
In
addition, it is unlikely that Mr van der Merwe, as the person clearly
in overall control of Zonnekus Mansion, would not have
informed most
if not all other occupants of the application for eviction given that
those occupying the property appeared to form
a relatively small and
closely interlinked circle at which he was the centre
.
[23]
The
unusual situation in the present matter is that no
section 4(2)
notice has ever been formally authorised by the Court for service on
the occupiers, normally a peremptory requirement. The object
of such
a notice is to afford the respondents under threat of an eviction
application an additional opportunity to put all relevant
circumstances before the Court.
[24]
In
Unlawful
Occupiers School Site v City of Johannesburg
(supra)
Brand JA stated as follows:
‘
[22]
As the appellants also correctly pointed out, it was held in Cape
Killarney Property (at 1227E - F) that the requirements of
s 4(2)
must be regarded as peremptory. Nevertheless, it is clear from the
authorities that even where the formalities required by statute
are
peremptory it is not every deviation from the literal prescription
that is fatal. Even in that event, the question remains
whether, in
spite of the defects, the object of the statutory provision had been
achieved…
[23]
The purpose of
s 4(2)
is to afford the respondents in an application
under PIE an additional opportunity, apart from the opportunity they
have already
had under the Rules of Court, to put all the
circumstances they allege to be relevant before the court (see Cape
Killarney Property
Investments at 1229E - F). The two subsections of
s 4(5)
that had not been complied with were (a) and (c). The object
of these two subsections is, in my view, to inform the respondents
of
the basis upon which the eviction order is sought so as to enable
them to meet that case. The question is therefore whether,
despite
its defects, the
s 4(2)
notice had, in all the circumstances,
achieved that purpose. With reference to the appellants who all
opposed the application and
who were at all times represented by
counsel and attorneys, the
s 4(2)
notice had obviously attained the
Legislature's goal. However, there were also respondents who did not
oppose and who might not
have had the benefit of legal
representation. It is with regard to these respondents that the
question arises whether the
s 4(2)
notice had, despite its
deficiencies achieved its purpose.’
[25]
The
sentiments in the
Unlawful
Occupiers School Site
case
were echoed in
Moela
v Shoniwe
[2]
by Streicher JA who stated as follows in para 9:
‘…
However,
the object of
s 4(2)
is clearly to ensure that the unlawful occupier
and municipality are fully aware of the proceedings and that the
unlawful occupier
is aware of his rights referred to in
s 4(5)(d).
It
may well be that that object, in appropriate circumstances, may be
achieved notwithstanding the fact that service of the notice
required
by
s 4(2)
had not been authorised by the court. That may, for
example, be the case if at the hearing it is clear that written and
effective
notice of the proceedings containing the information
required in terms of
s 4(5)
had in fact been served on the unlawful
occupier and municipality 14 days before the hearing…’
[26]
In
the present matter not only was the notice of motion served on all
the respondents setting out the relief sought but it further
set out
the grounds on which the application was based in the following
terms:
‘
1.1
(t)he applicants are the duly appointed liquidators of Zonnekus.
1.2
Zonnekus is the registered owner of the property. The respondents
reside in the property.
1.3
the respondents do no occupy the property on any lawful basis.
1.4
the applicants are under a statutory obligation to realise the assets
of Zonnekus including the property, for the benefit of
creditors.
1.5
the respondents were advised by letter dated 8 August 2017, delivered
to them by way of email and service by the Sheriff, that
they were
required to vacate the property by 8 September 2017.
1.6
Notwithstanding due and reasonable notice the respondents have failed
and/or refused to vacate the property and are accordingly
in unlawful
occupation thereof.’
[27]
Apart
from certain procedural issues, the
section 4(2)
notice which the
applicants intended to have authorised by the Court for service on
the occupiers contained little more information
than that contained
in the notice of motion. The
section 4(2)
notice would have advised
the respondents that they were entitled to enter an appearance to
oppose the main application, to appear
at court to defend the matter
on the date of the hearing and to place all relevant circumstances
before the Court for it to consider
whether the proposed eviction was
just and equitable, and finally, that they could apply for legal aid.
This last piece of information
was the only material difference
between the notice of motion and the proposed notice in terms of
section 4(2).
[28]
When
one has regard to
section 4(5)
of PIE, which sets out the
requirements to be addressed in a
section 4(2)
notice, it is clear
that all were met by the original notice of motion save for that
contained in 4(5)(d), namely, advising that
the alleged unlawful
occupiers had the right to apply for legal aid. In the circumstances
of the present matter, it is most unlikely
that this omission would
have made any meaningful difference. All the occupiers occupy or
reside in or around one luxurious dwelling
on an exclusive piece of
real estate on Woodbridge Island. All are connected to, or serve the
interests of, Mr van der Merwe who
actively opposed the eviction
application at all stages.
[29]
In
the present case it is common cause that on 26 March 2008, the notice
of motion was served on the City of Cape Town, the municipality
having jurisdiction. Not having received a
section 4(2)
notice made
no material difference as far as the City was concerned.
[30]
In
the circumstances, I am satisfied that written and effective notice
of the proceedings was given both to the respondents/occupiers
and to
the Municipality and that, notwithstanding the failure by the
applicants to serve a
section 4(2)
notice on the respondents, the
object of those statutory provisions have been achieved.
[31]
I
might add that my view may well have been different had the
applicants not effected the comprehensive service of the notice of
motion and the notice of set down through the Sheriff on all parties
on 10 December 2018.
The
Preservation Order/Locus Standi defence
[32]
Mr
van der Merwe emphasised that the genesis of the eviction application
was an order for the preservation of assets obtained by
SARS pursuant
to the provisions of
section 163
of the
Tax Administration Act, 28 of
2011
. On the extended return day, the provisional order was replaced
by an amended order which was taken by agreement. He contended that
since that order was taken by agreement it could not be varied
without the consent of all parties thereto; furthermore, that the
effect of the final order was that the applicants were interdicted
from dealing with, encumbering or disposing of the property
pending
the outcome of the action to be brought by SARS in respect of its tax
claim against Mr van der Merwe and associated parties.
[33]
Section
163
of the
Tax Administration Act provides
inter
alia
as follows:
‘
(1)
A senior SARS official may, in order to prevent any realisable assets
from being disposed of or removed which may frustrate
the collection
of the full amount of tax that is due or payable or the official on
reasonable grounds is satisfied may be due or
payable, authorise an
ex parte application to the High Court for an order for the
preservation of any assets of a taxpayer or other
person prohibiting
any person, subject to the conditions and exceptions as may be
specified in the preservation order, from dealing
in any manner with
the assets to which the order relates.
…
(9)
The court which made a preservation order may on application by a
person affected by that order vary or rescind the order or
an order
authorising the seizure of the assets concerned or other ancillary
order if it is satisfied that –
(a)
…
(b)
…
(10)
A preservation order remains in force-
(a)
pending the setting aside thereof on appeal, if any, against the
preservation order; or
(b)
until the assets subject to the preservation order are no longer
required for purposes of the satisfaction of the tax debt.
…
(12)
Assets seized under this section must be dealt with in accordance
with the directions of the High Court which made the relevant
preservation order.’
[34]
Accordingly
any such preservation order precludes ‘
any
person … from dealing in any manner with the assets to which
the order relates’
and that preservation order remains in force until the assets to
which the order is subject are no longer required for the purposes
of
the satisfaction of the tax debt, an eventuality which is yet to
occur.
[35]
Mr
van der Merwe pointed out furthermore that the applicants were not
involved in the preservation proceedings and that the final
order was
‘
agreed
to’
in order to preserve the status quo which existed at the time of its
granting. He argued further that the present application is
a
preliminary step to the selling of the property which would
constitute ‘
dealing
in the property’
,
conduct which is prohibited by the order and that furthermore that
the tax action brought by the tax authority is still pending.
[36]
The
order in question is indeed recorded as having been taken by
agreement and provides that pending the final determination of
an
action to be instituted by the Commissioner for SARS the respondents,
the first of which was Mr van der Merwe, are interdicted
from
‘
dealing
with, disposing of or encumbering’
a range of properties including Erf 13098, Milnerton, Western Cape,
being the property in question.
[37]
The
case for the applicants in regard to this defence is twofold.
Firstly, it contended that the limited purpose and effect of
section
163
of the
Tax Administration Act does
not detract from the powers of
the applicants as liquidators of a company in liquidation to recover
and reduce into possession
all the assets and property of the
company, movable and immovable, in satisfaction of the costs of the
winding up and the claims
of creditors. Secondly, it is contended
that the applicants expressly sought and were granted an order by the
High Court authorising
them to sell the property in question.
[38]
In
Minister
of Justice and Another v SA Restructuring and Insolvency
Practitioners Association and Others
[3]
it
was held that the fundamental purpose of insolvency litigation is ‘
to
secure the realisation of the remaining assets of the insolvent and
the distribution of the resulting amounts amongst creditors
in
accordance with the order of preference laid down by law’
.
Wallis JA went on to state:
‘
Although
the Master plays a vital role in overseeing the process of winding up
an estate, the process is nonetheless creditor-driven.
It is the
majority of creditors in number or value of claims that have the
right to elect trustees or nominate liquidators. They
have the right
to take decisions in respect of the manner in which the assets
falling into the estate, or constituting property
of the corporate
body, in winding-up are to be dealt with. The logic of this is
obvious. It is the creditors who stand to lose
as a result of the
insolvency. They are the best judges of their own interests and they
are the people best situated to instruct
the trustee or liquidator
how to go about the process of liquidation or winding-up.’
[39]
Furthermore,
in terms of section 386(1)(e) of the Companies Act, 61 of 1973 (‘the
1973 Companies Act’) the liquidator
has the power to take
measures for the protection and better administration of the affairs
and property of the company. In terms
of section 386(5) a Court may,
if it deems fit, grant leave to a liquidator to ‘
do
any other thing which the Court may consider necessary for winding up
the affairs of the company and distributing its assets’
.
[40]
On
15 December 2014, the High Court authorised the liquidator to sell
the property inter alia in the following terms:
‘
It
is ordered:
1.
That
the applicants are authorised to bring this application in terms of
section 386(5) of the 1973 Companies Act No 61 of 1973
…; and
2.
That
the applicants are authorised in terms of section 386(5) of the 1973
Companies Act No 61 of 1973 … to exercise the following
powers
in relation to the administration of Zonnekus Mansion (Pty) Ltd (in
liquidation) (‘Zonnekus’);
2.1
to be empowered to institute or defend such actions or other legal
proceedings as may be necessary;
…
2.8
to sell any movable or immovable assets of Zonnekus by public
auction, public tender or private contract and to give delivery
or
transfer thereof;
2.9
to elect whether or not to cancel any lease agreement entered into by
Zonnekus lessee prior to its liquidation;’
[41]
Mr
van der Merwe criticised the manner in which this order was obtained
on an ex parte basis but the fact remains that the order
stands and
has not been directly challenged by him at any stage.
[42]
What
is also material is that section 391 of the 1973 Companies Act
requires a liquidator to proceed forthwith to recover and to
reduce
into possession all the assets and property of a company in
liquidation for distribution to creditors and he has no discretion
about the performance of his duties.
[4]
[43]
A
situation analogous to the interplay between a preservation order in
terms of
section 163
of the
Tax Administration Act and
the winding up
order was addressed by the Supreme Court of Appeal in
Commissioner,
South African Revenue Services v Van der Merwe NO and others
.
[5]
The matter concerned an appeal to the Supreme Court of Appeal against
a High Court order that the Commissioner clear certain imported
equipment under its custody and control for release to the trustees
of an importer company which had since been placed into liquidation.
The Commissioner had refused to do so because the company was unable
to pay the value added tax and duties that were payable in
respect of
the equipment’s importation. The principal question in the
appeal was whether a trustee could take possession
of and deal with
the property concerned under insolvency law, or instead was prevented
from doing so by a statutory ‘
embargo’
,
namely various provisions of the Custom and Excise Act, 91 of 1964
and the Value Added Tax Act, 89 of 1991, in favour of the
Commissioner. It was held that section 47 of the Insolvency Act, 24
of 1936 preserved the common law position that a trustee had
to
realise all the assets of an insolvent – including those
subject to a lien. The following reasoning in the
Commissioner,
South African Revenue Services (supra)
judgment
is relevant to the present matter:
‘
[20]
The important aspect of these provisions is that they are all
addressed to the ordinary situation where goods are brought into
the
country and attract the liability to pay customs duty. They are
directed at the obligation of the importer and others
liable to pay
duty, and do not address the special situation of insolvency. That is
not surprising because that is dealt with in
the Insolvency Act, a
general statue intended to deal with all cases of insolvency. In
brief, when one looks at the liability to
pay customs duty in the
ordinary course, one looks to the provisions of the Customs Act
alone. When insolvency intervenes one turns
to the Insolvency Act’.
[44]
In
my view, by analogous reasoning this principle also applies to
section 163(1)
of the
Tax Administration Act.
[45
]
To
put the matter beyond any doubt an order granted by the High Court on
15 December 2014 specifically authorised the liquidators
to sell ‘
any
immovable or movable assets’
of
Zonnekus. Furthermore, it would appear that on 21 April 2017 the
attorneys representing the Commissioner for SARS advised the
applicants that they could proceed with dealing with the Zonnekus
property and that there was no need for a formal application
for
variation of the preservation order. This appears from the judgment
of Slingers AJ who heard the contempt application in terms
of which,
inter alia, Mr van der Merwe unsuccessfully sought to hold the
Commissioner, the applicants and the applicants’
attorney in
contempt of Court for breaching the preservation order by inter alia
procuring a buyer for three of Zonnekus’
properties in
circumstances such as the present without taking any steps to vary
the terms of the preservation order.
[46]
In
my view, the provisions of the 1973 Companies Act and the duties
imposed upon the applicants to liquidate and wind-up the estate
of
the company in liquidation, if necessary by selling the company’s
fixed properties, take precedence over the provisions
of the
preservation order. That order was sought at the behest of the
Commissioner of SARS who/which has specifically consented
to the
properties being sold if needs be. The fact that the preservation
order was taken ‘
by
agreement’
does not, in my view, as Mr van der Merwe contended, mean that it
could only be varied by agreement. In any event that issue is
a red
herring. The antecedent question is whether that order allows for the
sale of the properties and in my view for the reasons
furnished
above, it does. For all these reasons Mr van der Merwe’s
defence to the eviction application based on the terms
of the
preservation order has no merit.
[47]
The
first leg of the third procedural defence raised is that the present
application is incompetent because at the time it was launched
section 131(6)
of the
Companies Act, 71 of 2008
suspended the
liquidators’ powers.
[48]
Section
131(6)
of the
Companies Act dealing
with business rescue provisions
provides that:
‘
If
liquidation proceedings have already been commenced by or against the
company at the time an application is made …, the
application
will suspend those liquidation proceedings until -
(a)
the court has adjudicated upon the application; ...’
[49]
Given
that the effect of an application for leave to appeal is, ordinarily,
to suspend the order appealed against, liquidation proceedings
are
also suspended pending the outcome of such application for leave to
appeal against the refusal of a business rescue application.
[50]
As
stated earlier, since the granting of the final liquidation order in
respect of Zonnekus, Mr van der Merwe, or interests closely
associated with him, have launched a total of four business rescue
applications. All of them were unsuccessful but they were the
subject
of applications or petitions for leave to appeal which had the effect
envisaged in
section 131(6).
[51]
Mr
van der Merwe contended that when the present application was
launched on 23 March 2018, the liquidation proceedings were suspended
by an application for leave to appeal against the dismissal of the
third business rescue application. That application was dismissed
on
9 September 2016 by the Western Cape High Court. It was common cause
between the parties in the present application that the
last day for
filing an application for leave to appeal against that decision was
10 November 2016 but such application for leave
to appeal was filed
one day late on 11 November 2016.
[52]
For
reasons which have not been explained, that application for leave to
appeal remained dormant until 21 March 2018 when an application
for
condonation for its late filing was brought. That application,
together with the application for leave to appeal, was heard
on 4 May
2018. Condonation for the late filing was granted but the application
for leave to appeal was dismissed.
[53]
Mr
van der Merwe’s argument in these proceedings was that the
granting of condonation nonetheless regularised the late filing
of
the application for leave to appeal retrospectively, so to speak,
with the result that when the present eviction application
was
thereafter launched on 23 March 2018, the liquidators’ powers
were suspended and the application was incompetent.
[54]
In
my view this argument misconstrues the effect of condonation, more
specifically in the contention that condonation has retrospective
effect. This misconception is illustrated by the case of
Panayiotou
v Shoprite Checkers (Pty) Ltd and Others
[6]
which dealt with the effect of the late filing of an application for
leave to appeal. That matter involved an interpretation
of the terms
of
section 18
of
Superior Courts Act, 10 of 2013
. The legal question
that arose was whether the service of an application to condone the
late filing of a petition to the Supreme
Court of Appeal had the
effect of suspending the judgment against which leave to appeal was
sought. The Court held that it did
not, stating that the failure to
serve an application for leave to appeal within the prescribed limit
resulted in the lapsing of
the right to apply for leave to appeal,
and that only on the granting of condonation would it be revived. The
Court observed, in
para 13, that ‘
the
failure to serve notices of appeal or court records within the
prescribed periods is commonplace. The result of such failures
are
that the appeals lapse and require condonation to revive them’
.
The Court quoted with approval from various cases which emphasised
that failure to comply with rules relating to the lodging of
appeal
caused such appeals to lapse and to require condonation in order to
revive the appeal. It held that in the case before it
that the late
launching of an application for leave to appeal had caused the appeal
to lapse and in the absence of condonation
the order made by the
Court a quo was no longer suspended. In paragraph 15, the Court
referred to the underlying principle and
stated as follows:
‘
The
inherent logic of the position is unassailable. It can be tested by
asking what were to happen if many months or years were
to pass
before an application for condonation is lodged. It is untenable that
upon the service of a condonation application the
judgment would then
be suspended.’
[55]
What
Mr van der Merwe argues for is in effect a broad interpretation of
the order for condonation which would treat the application
for leave
to appeal as having been timeously served. By its very nature this is
not what a condonation order entails. Rather, it
recognises that the
application was brought out of time and, for the purposes of that
application alone, it condones this fact
and allows the Court to
entertain the application. What it does not do is create the fiction
that the application was in fact timeously
lodged and that any lawful
consequences which followed as a result, prior to condonation being
granted, are extinguished or reversed.
In the result, for these
reasons the argument that the present eviction application does not
constitute competent proceedings must
be rejected.
[56]
As
a second leg, Mr van der Merwe advanced the further argument that the
applicants had failed to secure a resolution from the creditors
and
members of Zonnekus at the second meeting of creditors on 24 February
2014 inter alia authorizing them to institute legal action
in respect
of any matter affecting the company or to sell any of its movable or
immovable property. They were thus obliged to apply
to the Master for
such direction and, failing that, only then to approach the Court for
such authority. It appears to be common
cause that the applicants did
not approach the Master for such directions.
[57]
The
argument proceeds that the applicants accordingly lacked the
authority to bring the present proceedings (and to sell the
property).
There are several difficulties with this argument, all
revolving around an order made by Davis J on 15 December 2014 in
terms of
sec 386(5) of the 1973
Companies Act (quoted
above) granting
the applicants extensive powers in the winding up of Zonnekus. These
included the power ‘
to
institute or defend such actions or other legal proceedings as may be
necessary’
and to ‘
sell
any immovable or movable assets of Zonnekus by public auction …
or private contract’
.
[58]
Mr
van der Merwe sought to counter the terms of this order by contending
that its provisions were of a temporary nature and intended
to be of
force and effect only until the presentation of the draft resolution
to members and creditors at the general meeting on
24 February 2014.
Firstly, this argument overlooks the fact that the order was granted
some ten months
after
the meeting in question. Secondly, the order made by Davis J is clear
and it stands. It is thus not for this Court, purporting
to act as a
court of appeal of review, to ignore the terms of that order or find
that it was not competent or binding. If he considered
that order was
not competent, it was open to Mr van der Merwe to challenge it
directly at that time.
The
respondents’ substantive defence i.e. that he occupies the
property in terms of a lease
[59]
Mr
van der Merwe averred in his opposing affidavit that ‘
in
or about 2013’
he entered into a ‘
verbal
rental agreement’
with Zonnekus for the entire property for a period of nine years and
eleven months commencing on 1 March 2014 coupled with a right
to
sub-lease the property. He avers further that it was agreed that he
would pay R3 570 000.00 cash in advance for the
entire
period of lease which amounted to R30 000.00 per month for 119
months. He ‘
or
someone on his behalf’
made 14 payments ‘
which
included his rental due’
between 2 December 2013 and 1 August 2014 totalling R4 689
514.00. He annexed copies of bank statements reflecting the deposits.
[60]
In
the applicants’ replying affidavit they dismiss the claimed
lease as a post-eviction application fabrication. They cite,
in
short, the following reasons for this allegation:
1.
After
their appointment in or about September 2014, the applicants were
presented with a lease in respect of the property purportedly
concluded between Zonnekus and BOAG (now known as Wild Olive) on 1
April 2014. That lease agreement was in writing;
2.
In
terms of that lease agreement the rental had been paid upfront for a
year i.e. until 30 March 2015. The applicants were suspicious
of this
transaction and of the validity of the lease agreement as a whole;
3.
In
February 2016 the applicants instructed their attorneys to demand
payment of arrear rental in terms of the BOAG lease agreement,
without conceding the validity thereof, but no response was received
to the letter of demand;
4.
The
applicants consequently cancelled the BOAG lease agreement in May
2016; at that time Mr van der Merwe made no mention of there
being
any sublease agreement between himself and BOAG and made no mention
of any purported lease agreement between Zonnekus and
himself;
5.
The
applicants cited email correspondence with Mr van der Merwe in March
2017 in which Mr van der Merwe made no reference to the
existence of
any head lease between himself and Zonnekus despite the fact that it
would have been highly relevant;
6.
When
the applicants’ attorneys wrote to the respondents in September
2017 demanding that they vacate the property, their then
attorney, Mr
Dunn, replied and raised a number of issues but made no mention of a
lease agreement between Mr van der Merwe and
Zonnekus. The notice to
vacate was sent by ENS on 8 August 2017 and the letter from TJC Dunn
Attorneys was dated 5 September 2017.
It was contended on behalf of
the applicants that this was an ideal opportunity to raise the matter
of Mr van der Merwe’s
alleged lease of the property with
Zonnekus.
[61]
In
my view it is unnecessary to deal with the dispute of fact which has
arisen relating to the existence of the alleged nine year
oral lease
and why Mr van der Merwe’s reliance on the alleged ‘
verbal
lease agreement’
is misplaced. Nonetheless, for the sake of completeness, I will do so
in due course. The reason is that both the interim and later
final
preservation orders made in terms of
section 163
of the
Tax
Administration Act interdicted
Zonnekus from ‘
dealing
with, disposing of encumbering ... any assets of which it is the
owner or to which it has any rights’.
The interdict in question was expressly stated in the order to apply
to the property which is the subject of this application.
The final
order, taken on 19 March 2014, confirmed the interdict in relation to
the property. Mr van der Merwe states in his opposing
affidavit that
he entered into the alleged verbal rental agreement on 1 March 2014,
in other words six months after the provisional
preservation order
was granted and whilst it was still in force. The alleged date of
conclusion of the agreement was, incidentally,
some three weeks prior
to the order being made final. The result is that even if Mr van der
Merwe’s statement that he purported
to enter into this lease
agreement with Zonnekus (and made the payments in question) is
accepted, the agreement is void and unenforceable.
The further
consequence is, of course, that Mr van der Merwe and all other
occupiers have no substantive defence to the eviction
application
since they have no right or title to occupation of the property.
[62]
In
the result, Mr van der Merwe’s substantive defence cannot
stand.
[63]
It
is trite that in motion proceedings seeking final relief, an
applicant cannot succeed in the face of a genuine dispute of fact
that is material to the relief sought. But, as was pointed out by
Cameron JA in
SA
Veterinary Council and another v Syzymanski
[7]
,
Corbett CJ in
PlasconEvans
Paints (TVL) Ltd v Van Riebeeck Paints (Pty) Ltd
[8]
‘amplified’
the ambit of uncreditworthy denials that would
not
impede the grant of relief. The learned judge extended them beyond
those ‘
not
raising a real genuine or bona fide dispute of fact’
,
to allegations or denials that are ‘
so
far-fetched or clearly untenable that the Court is justifying in
rejecting merely on the papers’
.
[64]
Mr
van der Merwe’s averments relating to the alleged nine year
lease amount to a denial of the allegation in the applicants’
founding affidavit that ‘
the
occupiers of the Mansion did not occupy it on the basis of the valid
lease agreement, by any other arrangement reached with
the
liquidators, or any other right in law to do so’
.
It would be an overstatement to say that Mr van der Merwe’s
allegations as regards the existence of a lease are a bald denial.
However, no objective proof of the existence of any such lease nor
any prior reference to it in his lengthy legal travails with
the
applicants is mentioned. The term of the lease, nine years and eleven
months, is fortuitously one month less than a lease that
would be
required to be recorded in writing and no explanation for this
unusual term is furnished. The only details furnished by
Mr van der
Merwe relating to the alleged lease, apart from its main terms, are
his assertions that such agreed rental was paid
in advance (again
with no explanation for this arrangement), and the furnishing of the
dates of payment and bank statements allegedly
substantiating such
payments. When regard is had to these bank statements, however, there
is no indication that the payments were
even made by Mr van der
Merwe. More importantly, not one of these payments reflects that such
payment was in lieu of rental. On
the contrary, several of them
indicate that the payment was for something completely different. The
descriptions or explanations
recorded in the bank statements include:
‘
refund’,
‘consult fees’, ‘settlement’
and four instances of these payments being described as ‘
loans’
.
[65]
In
my view when regard is had to the entire manner in which Mr van der
Merwe dealt with this alleged lease agreement i.e. the lack
of any
proof or even a prior reference thereto, the unexplained prepayment
of rental, the fact that none of the alleged payments
are reflected
as ‘
rental’
and the prior, contradictory reliance by Mr van der Merwe on a lease
with BOAG, the dispute of fact relied on must be regarded
as falling
into that category described as so ‘
far-fetched
or clearly untenable that the Court is justified in rejecting (it)
merely on the papers’
.
[9]
For these additional reasons, Mr van der Merwe’s substantive
defence would, in any event, not stand.
Would
eviction be just and equitable and the operative date?
[66]
Mr
van der Merwe conceded that if the Court should not uphold any of his
substantive or procedural defences it would be just and
equitable for
the Court to order the eviction of the respondents from the premises.
In other words, he conceded that it was not
necessary for this issue
or the effective date of eviction to be argued. This concession was
well made since there is nothing in
the papers to suggest that any of
those respondents who remain in occupation of the property would have
any difficulty in securing
alternative accommodation at fairly short
notice. There is no suggestion that any respondent/occupier is
impecunious or that there
is a shortage of accommodation which might
apply to them. In my view allowing the applicants at least two months
to vacate the
property would be just and equitable.
[67]
In
the circumstances and for these reasons the following order is made:
It
is ordered that:
1.
The respondents (more fully described in annexure ‘A’
hereto) and all those holding title under them (‘the
occupiers’), vacate the premises known as Erf 13898, Milnerton,
situated at Chandos Close, Woodbridge Island, Milnerton,
also known
as ‘Zonnekus Mansion’ (‘the property’) by no
later than 31 May 2019;
2.
Should the occupiers fail to vacate the property by 31 May 2019, the
Sheriff within whose jurisdiction the property is situated,
shall
evict the occupiers from the property by no later than 15 June 2019;
3.
The costs of this application, including the costs of all
postponements to date hereof, shall be costs in the liquidation of
Zonnekus Mansion (Pty) Ltd.
____________________
BOZALEK J
For
the Applicant
: Adv R Van
Rooyen
As
Instructed by
: Edward
Nathan Sonnenbergs
Ref:
Ms A Spies
For
a Respondent
: Mr G van der
Merwe (In Person)
[1]
2005 (4) SA
199
(SCA) para [22].
[2]
2005 (4) SA 357 (SCA).
[3]
2017 (3) SA 95
(SCA) at para
[55].
[4]
Blackman, Commentary of the
Companies Act [the
1973 Act], Vol 1 14 – 378 and the
authorities referred to therein.
[5]
[2017] 2 All
SA 335
(SCA) para [20].
[6]
2016 (3) SA
110 (GJ)
[7]
(79/2001)
[2003] ZASCA 11
(14
March 2003).
[8]
1984 (3) SA
623 (A).
[9]
Drawing on the minority judgment
of Botha AJA in
Associated
South African Bakeries (Pty) Ltd v Oryx en Vereinigte Backereien
(Pty) Ltd en Andere
1982 (3) SA 893
(A) at 924(a) cited in
SA
Veterinary Council
at
paragraph 24 and footnote 14.